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2017/12/12

Do trademark rights owners have recourse against similarly transliterated names?

by Gary Kuo

Chinese, like many languages, has established commonly-followed conventions for transliterating names in foreign languages. Names of famous people, brands and companies however often find themselves the target of infringement, as we have explored before. A recent case before Taiwan’s IP Court highlighted issues surrounding the transliteration of foreign language words into Chinese characters, and the rights afforded trademark owners in defending their marks against similarly-named brands or companies.

Article 70, paragraph 2 of Taiwan’s Trademark Act provides that “without the consent of the trademark rights holder, any of the following circumstances will be deemed infringement of trademark rights: knowing that a trademark is a well-known registered trademark of another person, and using words [or characters] from that well-known trademark as one’s company name, business name, group name, domain name, or other indication of business entity, causing a likelihood of confusion or misidentification among relevant consumers or a likelihood of diluting the distinctiveness or reputation of that trademark.” Is “using words [or characters] from that well-known trademark” only limited to words [or characters] identical to the well-known registered trademark? In the “FRANKLIN” case, the IP Court’s first and second instance judgments suggest that the answer to this question is no.

Background

Franklin Templeton Securities Investment Consulting (SinoAm) Inc., a group company of Franklin Templeton Investments, one of the biggest global asset management companies, has provided mutual fund services in Taiwan since 1990. Franklin Templeton Distributors, Inc. filed for trademark registration of the mark “Fu Lan Ke Lin (“FRANKLIN” in Chinese characters, 富蘭克林)” with the Taiwan Intellectual Property Office (TIPO) in 1998, and obtained registration in 2000. Franklin Templeton Distributors, Inc. then licensed this trademark to Franklin Templeton Securities Investment Consulting (SinoAm) Inc., which the company used to represent its mutual fund services.

Friendly Group was established in Shanghai in 2002. The group filed for and obtained trademark registration for the “Fu Lan De Lin” (“FRIENDLY” in Chinese characters, 富蘭德林) mark in Taiwan, which contains three characters identical to the “Fu Lan Ke Lin (“FRANKLIN” in Chinese characters, 富蘭克林)” mark, in 2003. The services designated for this mark include “commercial or industrial management assistance, marketing research and consulting, corporate consultancy, education, publication”. Yet the service it actually provided in 2013, security investment consulting, was not designated for this mark.

In 2013, Friendly Group established two companies in Taiwan, which used “Fu Lan De Lin” as the distinctive portion of their names (i.e. Fu Lan De Lin Securities Co., Ltd. and Fu Lan De Lin Investment Co., Ltd.). In addition, Friendly Group used “Fu Lan De Lin” as a trademark to promote its “security investment consulting” services. FRANKLIN/TEMPLETON DISTRIBUTORS, INC. discovered this and commissioned its attorney to send a cease and desist letter to these two companies demanding that they discontinue use of “Fu Lan De Lin” as their company name and trademark.

These two companies responded that “Fu Lan De Lin” is the Chinese transliteration of their company group’s English name, “FRIENDLY”, while “Fu Lan Ke Lin (“FRANKLIN” in Chinese characters)” is the transliteration of the family name of Benjamin Franklin, one of Founding Fathers of the United States. These two terms are obviously different. Furthermore, Friendly Group never claimed that it was in any way related to Franklin Templeton. Therefore, consumers would not confuse “Fu Lan De Lin” with “Fu Lan Ke Lin”. As a result, the companies refused to comply with the cease and desist request from Franklin Templeton Distributors, Inc.

Civil Suit

In 2015, Franklin Templeton Distributors, Inc. initiated a civil suit with the IP Court against the two “Fu Lan De Lin” companies, asserting that their adoption of “Fu Lan De Lin” as company name and trademark constituted intention to mislead consumers and free-ride on its goodwill. Accordingly, it claimed that these two companies infringed upon its trademark rights and requested that the IP Court order them to cease use of the “Fu Lan De Lin” trademark.

Generally speaking, a trademark right owner in Taiwan is entitled to prevent others from using a similar trademark which is likely to mislead consumers, but does not have the right to prevent others from using an identical or similar term as “a company name, business name, group name, domain name, or other indication of business entity.” However, in case that a trademark becomes “well-known” via extensive marketing and promotion, it is granted greater protection under Taiwan’s Trademark Act in order to prevent others from using it in the above-mentioned manner. Furthermore, a holder of a well-known trademark also has the right to prevent others from using a similar mark for dissimilar products or services.

As Franklin Templeton Distributors, Inc. owns the prior registered trademark “Fu Lan Ke Lin”, it is entitled to claim that “Fu Lan De Lin” is a similar trademark which is likely to cause consumer confusion and therefore infringe upon its trademark rights. It is also able to claim that “Fu Lan Ke Lin” has already become a well-known mark in the “security investment” field due to its long-term extensive marketing. As a result, it is entitled to request the two “Fu Lan De Lin” companies to cease using “Fu Lan De Lin” as the distinctive portion of their company names.

Article 68, paragraph 3 of Taiwan’s Trademark Act provides that “using a trademark which is similar to the registered trademark and used in relation to goods or services identical with or similar to those for which the registered one is designated, causing a likelihood of confusion among relevant consumers” constitutes infringement of the trademark owner’s trademark rights. Hence, if the Court recognizes that “Fu Lan Ke Lin” and “Fu Lan De Lin” are similar trademarks that may cause a likelihood of consumer confusion, Franklin Templeton Distributors, Inc. is entitled to prevent the use of the “Fu Lan De Lin” mark.

Furthermore, Article 70, paragraph 2 of Taiwan’s Trademark Act provides that “knowing that a trademark is a well-known registered trademark of another person, and using words [or characters] from that well-known trademark as one’s company name, business name, group name, domain name, or other indication of business entity, causing a likelihood of confusion or misidentification among relevant consumers or a likelihood of diluting the distinctiveness or reputation of that trademark” should be deemed infringement of the trademark owner’s trademark right. It is apparent that the wording “using words [or characters] from that well-known trademark as one’s company name, business name, group name, domain name, or other indication of business entity” in Article 70, paragraph 2 is different from that of “using a trademark which is similar to the registered trademark” in Article 68, paragraph 3 of the same Act. The above comparison suggests that the legislators would like to distinguish the circumstances described in these two sections, and limit the coverage of Article 70, paragraph 2 to “using a company name or other business identity indication identical to a well-known trademark.” Since the defendants in the “FRANKLIN” case use “Fu Lan De Lin” as the distinctive portion of their company names, which is not identical to the plaintiff’s trademark “Fu Lan Ke Lin” (the characters “De” and “Ke” are different, 德 and 克), it is disputable that the use of “Fu Lan De Lin” infringes upon the trademark right of “Fu Lan Ke Lin” as granted under Article 70, paragraph 2.

In accordance with the “Line-by-Line Interpretation of the Trademark Act” published by the TIPO, “using words [or characters] from a well-known trademark” provided under Article 70, paragraph 2 of Taiwan’s Trademark Act should be construed as using a term “completely identical to” the “words [or characters]” contained in that well-known trademark which easily attracts consumers’ attention and can be used to distinguish it from others’ goods or services. Considering that (a) “identical or similar to a third party’s well-known trademark ” is used in Article 70, paragraph 1 of Taiwan’s Trademark Act (whose wording is different from that used in Article 70, paragraph 2), and (b) Article 70 of the same Act is a legal fiction provision that defines the acts that are deemed infringement; therefore, the interpretation of “using words [or characters] from a well-known trademark,” provided under Article 70, paragraph 2, should not be arbitrarily broadened to refer to using a term “similar to” the “words [or characters]” contained in that well-known trademark. Having said that, if a similar term’s principal impression for identification is deemed substantially the same as the “words [or characters]” used in the well-known trademark according to social general concept or a similar term is used as the distinctive portion of its business identity, such use should still be construed as “using words [or characters] from a well-known trademark”. Hence, pursuant to the TIPO’s interpretation, “using words [or characters] from a well-known trademark” provided under Article 70, paragraph 2 should be limited to using a term “completely identical to” the “words [or characters]” contained in that well-known trademark in principle. The exceptions to this are: (i) a similar term’s principal impression for identification is substantially the same as the “words [or characters]” used in the well-known trademark, and (ii) a similar term is used as the distinctive portion of its business identity.

In the “FRANKLIN” case, the plaintiff’s trademark “Fu Lan Ke Lin” is certainly not identical with the term “Fu Lan De Lin” used by defendants. As a consequence, the question should be whether the principal impression created by “Fu Lan De Lin” is substantially the same as that by “Fu Lan Ke Lin”.

The IP Court judgment for the first instance held that although there exists a difference between the “De” character of “Fu Lan De Lin” and the “Ke” character of “Fu Lan Ke Lin”, (i) “De” and “Ke” rhyme, and (ii) the other three words “Fu”, “Lan”, and “Lin” are identical. “Fu Lan De Lin” and “Fu Lan Ke Lin” should be deemed different translations of the same term “FRANKLIN”, and the major identification concept of “Fu Lan De Lin” and “Fu Lan Ke Lin” is substantially the same. As such, the IP Court for the first instance concluded that the use of “Fu Lan De Lin” in the defendants’ company names should be deemed as using “words [or characters] from the well-known ‘Fu Lan Ke Lin’ trademark”.

The IP Court’s second-instance judgment took basically the same position as that of the first-instance judgment. However, it further recognized the similarity between “Fu Lan De Lin” and “Fu LanKeLin” in terms of appearance, sound, and concept. It held that (i) the appearance of “Fu Lan De Lin” and that of “Fu Lan Ke Lin” are highly similar, to the extent that they are substantially the same, (ii) the sound of “Fu Lan De Lin” and that of “Fu Lan Ke Lin” are similar, to the extent that it is hard to distinguish the difference between them, and (iii), in terms of concept, both “Fu Lan De Lin” and “Fu Lan Ke Lin” give consumers the impression that they are translated from the same term: “FRANKLIN”. Hence, the second-instance judgment also concluded that the use of “Fu Lan De Lin” in the defendants’ company names should be deemed as using “words [or characters] from the well-known ‘Fu Lan Ke Lin’ trademark.”

Conclusion

The IP Court’s first and second instance judgements in the “FRANKLIN” case indicate the Court’s holding that “using words [or characters] from a well-known trademark” provided under Article 70, paragraph 2 of Taiwan’s Trademark Act should not be limited to using a term “completely identical to” the “words [or characters]” contained in that well-known trademark. The following situations may be deemed as “using words [or characters] from a well-known trademark”: (i) the parties’ marks and names (a party uses the words [or characters] from a well-known mark in its name) are just different translations of a single term, and are substantially the same regarding identification; or (ii)(a) the appearances of the parties’ marks and names are highly similar, and even substantially the same, (b) it is hard to perceive the difference between the parties’ marks and names, and (c) the parties’ marks and names are translations of a single term. It appears that the criteria used by the Court are similar to those used by the TIPO in the “Line-by-Line Interpretation of the Trademark Act” as described above (namely, in case that a similar term’s principal impression for identification is substantially the same as the “words [or characters]” used in the well-known trademark, such use should be deemed as “using words [or characters] from a well-known trademark”).

Given the IP Court’s holding in the “FRANKLIN” case, it may be concluded that a “well-known trademark” owner is not only able to prevent others from using a term “identical to its mark” as the “company name, business name, group name, domain name, or other indication of business entity,” but also able to prevent others from using a non-identical term which is highly similar to the extent that it is “substantially the same” as a well-known mark.

Whether “Fu Lan De Lin” and “Fu Lan Ke Lin” should be deemed substantially the same, we are of the opinion that as Benjamin Franklin is a very famous historical figure from the United States, and his name has been consistently translated as “Fu Lan Ke Lin” in Chinese, the number of Taiwanese people who would mistake “Fu Lan De Lin” as the translation of “Franklin” are likely not many!